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Emerging market investments entail significant disclosure, financial reporting and other risks

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Apr 21, 2020

On April 21, 2020, the Securities and Exchange Commission (SEC) Chair Jay Clayton and a group of senior SEC and PCAOB officials issued a joint statement warning about the risks posed by “emerging market” investments. While the statement addresses all emerging markets, it focuses on China.

In many emerging markets, including China, there is substantially greater risk that disclosures will be incomplete or misleading and, in the event of investor harm, substantially less access to recourse, in comparison to U.S. domestic companies. This significant asymmetry holds true even though disclosures, price quotes and other investor-oriented information often are presented in substantially the same form as for U.S. domestic companies. The statement summarizes some of these risks and related considerations specific to issuers, auditors, index providers and financial professionals.

Review the full statement on the SEC's website.

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